Author Question: A bank finds itself short of required reserves and therefore borrows from another commercial bank. ... (Read 56 times)

mmm · **on:** Jun 30, 2018

A bank finds itself short of required reserves and therefore borrows from another commercial bank. The interest rate on this loan is:
a. zero.
b. the prime rate.
c. the discount rate.
d. the federal funds rate.
e. the required reserve ratio.

Question 2

An increase in the market interest rate, other things equal, will _____.
a. have no effect on investment
b. increase the amount invested since the rate of return will be lower
c. increase the amount invested because income will increase
d. reduce the amount invested because the opportunity costs of investing will be higher
e. increase the amount invested because the rate of return will be higher